Dewars Garage Limited vs. DCIT

Parties Involved

Facts Summary

The assessee, Dewars Garage Limited, filed its return of income on 20.10.2023, declaring a total income of Rs.1,03,26,856/-. The case was selected for scrutiny due to lower disallowed amounts under section 40(a)(ia) of the Act compared to the audit report and low net profit compared to business income. The Assessing Officer (AO) noted that the assessee had paid rent of Rs.1,44,00,000/- to its sister concern, Dewar Garage Insurance Agencies Pvt. Ltd., without providing documentary evidence and ownership documents. The AO added this amount to the assessee's income. The assessee appealed against this addition, and the Commissioner of Income Tax (Appeals) dismissed the appeal. The Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeals) and directed the AO to delete the disallowance of Rs.1,44,00,000/-. The Tribunal also set aside the addition of Rs.84,90,423/- as interest due on a loan taken from Matheson Bosanquet Enterprises Pvt. Ltd., as the amount represented interest payable in respect of earlier years. The Tribunal further set aside the addition of Rs.13,58,727/- in respect of trade payables and Rs.13,04,007/- in respect of money received against car sales from customers.…

Legal Issues

• 1. Disallowance of Rs.1,44,00,000/- as rent paid to sister concern
• 2. Addition of Rs.84,90,423/- as interest due on loan
• 3. Addition of Rs.13,58,727/- in respect of trade payables
• 4. Addition of Rs.13,04,007/- in respect of money received against car sales from customers

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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